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Senate Bill 1541 report outlines school spending patterns

As the Legislature prepares for the upcoming session, the Oregon Department of Education (ODE) has released a new report to help lawmakers better understand how K-12 school districts allocate their resources.

The report, required by Senate Bill 1541, passed in 2016, reviews district spending in multiple categories and looks at different factors that could affect how districts spend their money. It also analyzes whether variations in spending are related to student outcomes.

“My hope is that it will help legislators better understand the challenges of different districts and how they allocate resources in different ways,” said Brian Reeder, ODE assistant superintendent.

Key findings include:

  • District characteristics, particularly size, play a big role in determining the share of funding allocated to various categories. The smallest districts in the state allocate their resources much differently than larger ones. Salary levels, which vary considerably around the state, also play a role.
  • Higher shares of spending dedicated to instruction and extracurricular activities are associated with better student outcomes, as is a longer school year.
  • Economies of scale exist for categories of spending characterized by high fixed costs, particularly operations and maintenance, district administration, business services and transportation. For small districts, spending per student is much higher in these categories, potentially diminishing the level of resources available for activities that may contribute more to student learning.

Legislators, in requesting the study, noted that Oregon’s school funding formula was designed to keep per-student funding fairly consistent across districts. Yet districts around the state report large variations in such areas as length of the school year, class sizes and the amount spent on instruction and in other areas.

One surprise from the analysis, Reeder said, was the discovery that very small districts spend a smaller share of revenue on instruction than larger districts. That’s because of certain high fixed costs in areas such as transportation and operations.

Betsy Miller-Jones, OSBA’s executive director, said the report provides a valuable snapshot of how districts of varying sizes allocate their resources. But she said it is important not to make overly broad generalizations based upon the data.

“What works for a district of 50 students is not necessarily useful for one of several thousand students,” she said. “Oregon’s communities are so different – that is why we emphasize the importance of local control.”

Oregon has about 576,000 students in K-12 schools, growing at an average annual rate of 0.3 percent over the past 15 years. The rate of growth has been quite different among various demographic groups, however. The number of Hispanic students has more than doubled while the number of white students has dropped by nearly 20 percent.

K-12 funding has increased during that time span from $3.65 billion to $6.08 billion. About 60 percent of operating expenses went to salaries in 1999-2000, with benefits totaling 23 percent. By 2014-15, salaries accounted for 50 percent of operating expenses, and benefits had grown to 29 percent.

Teacher salaries vary widely across the state -- from under $40,000 in some small rural districts to more than $70,000 in the Portland metro area. That large variation may impact how districts allocate their money, according to the study. For example, districts with lower teacher salaries may be able to afford smaller class sizes because the cost for each teacher is lower.

While most districts receive between $9,000 and $13,000 per student in state funding, some districts get considerably more. Small districts receive additional funding from the Small School Correction, which provides additional weights in the funding formula for districts that have small high schools and small and remote elementary schools.

A PDF of the full final report can be found here: 2016 - December - SB 1541 Report or on the ODE website.